Julaug05.vp

Use And Costs Of Bariatric Surgery AndPrescription Weight-Loss Medications
Treatment for obesity has skyrocketed since 1998, but coveragepolicies remain uneven across insurers.
by William E. Encinosa, Didem M. Bernard, Claudia A. Steiner, and
ABSTRACT: The extent of use of bariatric surgery and weight-loss medications is unknown.
Using the Nationwide Inpatient Sample, we estimate that the number of bariatric surgeries
grew 400 percent between 1998 and 2002; such surgeries were performed on 0.6 percent
of the 11.5 million adults clinically eligible in 2002. Hospital costs for bariatric surgery grew
sixfold to $948 million in 2002. The inpatient death rate declined 64 percent. Among em-
ployers that covered weight-loss drugs in 2002, less than 2.4 percent of adults clinically eli-
gible for these drugs used them, with average annual spending of $304 per user.
The obesity epidemic hasrecently pharmaceuticalpipeline,withtwocurrently
These bariatric treatments have substantial
attention is now drawn to two medical treat-
health benefits. A recent meta-analysis found
ments for obesity: bariatric surgery and bar-
that the percentage of excess weight loss was
iatric pharmacotherapy. Bariatric surgery,
61.6–70.1 percent with gastric bypass, the most
one of the fastest-growing surgical proce-
common bariatric surgery. As a result, diabetes
dures in the United States, involves restrict-
was completely resolved in 76.8 percent of pa-
ing the size of the stomach and bypassing
tients.3 Another recent study found that gas-
part of the intestines to reduce the absorption
tric bypass patients had an 89 percent reduced
of food. Bariatric pharmacotherapy involves
prescription weight-loss medications that ei-
ther reduce the absorption of fat or suppress
mended only for morbidly obese persons with
the appetite. Xenical (orlistat), a drug that
a body mass index (BMI) of 40 or more, bariat-
blocks about one-third of ingested fat, was
ric drug therapy is recommended for obese
the third most heavily advertised drug in
people with a BMI of 30 or more.5 A recent
1999: $76 million was spent on advertising it
meta-analysis found that bariatric medica-
to consumers.1 There are about twenty-two
tions result in a net weight loss of fewer than
ten pounds (over the placebo weight loss) at
William Encinosa ([email protected]) is a senior economist in the Center for Delivery, Organization, andMarkets, Agency for Healthcare Research and Quality, in Rockville, Maryland; Claudia Steiner is a seniorresearch physician there. Didem Bernard is a senior economist in the AHRQ Center for Financing, Access, andCost Trends. Chi-Chang Chen is a postdoctoral fellow at the University of Maryland School of Pharmacy inBaltimore.
H E A L T H A F F A I R S ~ Vo l u m e 2 4 , N u m b e r 4
DOI 10.1377/hlthaff.24.4.1039 2005 Project HOPE–The People-to-People Health Foundation, Inc.
one year, but this amount may still be clinically
counter Database, which contains claims for
significant in reducing diabetes and high
inpatient care, outpatient care, and prescrip-
tion drugs for enrollees under age sixty-five in
There are no national estimates of the use
the employer-sponsored benefit plans of forty-
and costs of bariatric surgery and weight-loss
five large employers across the country. The
prescription drugs. In this paper we address
MarketScan data include 5.6 million people—
this data gap using national hospital and in-
ployer-sponsored health insurance coverage(5.1 million of these have drug coverage).
data to examine the use and costs of bariatric
Inpatient Sample (NIS) of the Healthcare Cost
surgery. Next, we used the Medstat data to
and Utilization Project (HCUP) for 1998 and
study use of and spending for prescription
2002.7 The NIS is a nationally representative
inpatient care database containing data fromabout 1,000 hospitals sampled to approximate
a 20 percent stratified sample of U.S. commu-
nity hospitals. Total charges reported in the
hibit 1 presents national estimates for use, to-
NIS are used with hospital-specific cost-to-
tal hospital costs, and cost per surgery by
charge ratios to estimate hospital costs for bar-
payer based on the NIS data. The total number
of surgeries more than quadrupled, from an es-
Our second source of data was the Medstat
timated 13,386 in 1998 to 71,733 in 2002. In
2002 MarketScan Commercial Claims and En-
2002, privately insured patients accounted for
EXHIBIT 1National Estimates Of Bariatric Surgery Use And Costs, By Payer, 1998 And 2002
SOURCE: Healthcare Cost and Utilization Project (HCUP) Nationwide Inpatient Sample (NIS), 1998 and 2002.
NOTES: All costs are in 2002 dollars and include inpatient costs only. Standard errors are in parentheses.
83 percent of surgeries, while Medicare, Medic-
rate declined 64 percent (Exhibit 2). Both
aid, and self-pay accounted for 6, 5, and 3 per-
length-of-stay and mortality generally in-
cent, respectively. The remaining 3 percent
were paid for by other government sources, a
military plan for civilians, and charity.
dergo bariatric surgery in both years. In 2002
National hospital costs for bariatric surger-
women accounted for 84 percent of all surger-
ies increased more than sixfold, from an esti-
ies. However, both lengths-of-stay and inpa-
mated $157 million in 1998 to $948 million in
tient death rates were higher among men.
2002, in constant 2002 dollars.9 Mean cost per
Although the inpatient death rate for men de-
surgery increased 12.9 percent, from $11,705 in
clined greatly between 1998 and 2002, it was
1998 to $13,215 in 2002. The largest increase in
still three times higher than the rate among
average costs was for Medicaid-covered sur-
geries, with an increase of 17.7 percent, despite
Based on national estimates of surgeries for
a decline in length-of-stay from 5.8 days to 4.9
2002, we next estimated the prevalence of bar-
iatric surgery among those who were clinically
Exhibit 2 presents national estimates of the
eligible.11 Using the clinical guidelines de-
number of surgeries, lengths-of-stay, and inpa-
scribed above, we estimated that there were at
tient death rates, by age and sex. Focusing on
least 11.5 million adults eligible for bariatric
2002, patients ages 18–54 accounted for 88
surgery in 2002.12 Adjusting for multiple sur-
percent of all surgeries, while the near-elderly
geries per patient, we estimated that there
(ages 55–64) accounted for 11 percent. Adoles-
were a total of 70,124 adult bariatric patients
cents and the elderly accounted for the re-
in 2002.13 Thus, of the 11.5 million adults who
maining 1 percent.10 The fastest growth in bar-
were clinically eligible for the surgery, only 0.6
iatric surgeries between 1998 and 2002—a
percent received the surgery in 2002.
tenfold increase—occurred among the near-
presents use and spending by type of surgery,
Overall, lengths-of-stay declined 24 per-
using the 2002 Medstat employer data. While
cent for all surgeries, and the inpatient death
Exhibit 2 presents hospital costs, Exhibit 3
EXHIBIT 2National Estimates Of Bariatric Surgery Use And Outcomes, By Age And Sex, 1998And 2002
SOURCE: Healthcare Cost and Utilization Project (HCUP) Nationwide Inpatient Sample (NIS), 1998 and 2002.
NOTES: Standard errors are in parentheses. The number of surgeries in age groups 12–17 and 65+ for 1998 is too small to
H E A L T H A F F A I R S ~ Vo l u m e 2 4 , N u m b e r 4
EXHIBIT 3Average Bariatric Surgery Spending In A Sample Of Large Employers, 2002
SOURCE: Medstat, MarketScan 2002 (5.6 million nonelderly covered lives in employer-sponsored health plans).
NOTES: “Other gastric bypass” includes long limb bypass and bilopancreatic diversion. All payments are for inpatient hospital
presents the prices actually transacted. In
surgical joining of the bypass, or dealing with a
2002 the average price for a surgical procedure
was $19,346. Physician payments accounted
The less intensive banding, or gastroplasty
for 14 percent ($2,667), while hospital pay-
without gastric bypass, accounted for 4 per-
ments accounted for 86 percent ($16,679) of
cent of surgeries, while Roux-en-Y gastric by-
total payments.14 On average, patients paid 3.3
passes accounted for 84.7 percent. Other gas-
percent of expenditures in the form of copay-
tric bypasses made up 9.2 percent of surgeries,
ments or deductibles, and health plans paid
while revision-only surgeries accounted for
the remaining 2 percent. Payments increased
(CPT-4 codes for procedures) enabled us to
banding/gastroplasty to Roux-en-Y to other
examine use and spending by type of bariatric
gastric bypass. Also, doctors were paid more
surgery. Exhibit 3 groups the surgeries into
as the surgeries became more advanced.
four types. The first type (gastric banding and
We also found that payments varied by the
gastroplasty without bypass) simply reduces
type of health plan. For example, for Roux-en-
the size of the stomach, either by stapling the
Y, the average total payment was only $16,222
stomach (gastroplasty) or by placing a tight
under capitated health maintenance organiza-
(Roux-en-Y gastric bypass) includes a reduc-
point-of-service HMOs, and preferred pro-
tion in the size of the stomach and a bypassing
vider organizations (PPOs), the total pay-
of part of the intestines to reduce the absorp-
ments were $17,749, $20,154, and $21,698, re-
tion of food. The third type (other gastric by-
spectively. Length-of-stay was 3.9 days for all
pass) is a more advanced technique in which
longer lengths of the intestine are bypassed
under bilopancreatic diversion or duodenal
two ways. The non-laparoscopic approach re-
switch gastric bypass.15 The fourth type of sur-
quires the abdomen to be opened, while the
gery (revision only) is a follow-up surgery that
laparoscopic method is a less invasive method
may involve readjusting the band, revising the
in which surgeons, guided by a video camera,
gain access to the abdomen through several
medication use and spending among the 2002
small incisions. Fourteen percent of bariatric
Medstat employer sample. Of the 5.1 million
surgeries were laparoscopic (94 percent of
with drug coverage, about 4 million had bar-
these laparoscopies occurred in Roux-en-Y
iatric drug coverage. Of that 4 million, 21,931
bypass). Laparoscopic surgeries were less
used bariatric prescription drugs. Among the
costly than non-laparoscopic surgeries; how-
users, 45 percent used orlistat, 30 percent used
ever, doctors were paid 6 percent more for lap-
sibutramine, and 35 percent used sympatho-
aroscopy (Exhibit 3). Moreover, the patient’s
mimetics (10 percent used multiple drugs).
out-of-pocket payment was 75 percent higher
Close to 71 percent of the sympathomimetic
Of all surgeries, 3.8 percent involved a revi-
Although orlistat and sibutramine are rec-
sion; 2 percent had a revision during a follow-
up surgery, and 1.8 percent, during the initial
years), the average number of days of medica-
surgery. Surgeries with revisions were 37 per-
tion supplied per patient per year was 110 days
cent more costly than surgeries without revi-
for orlistat and 102 days for sibutramine. This
may suggest that the discomfort of side effects
reduces adherence.19 The average number of
tions. As of 2002, eight drugs had been ap-
days of medication supplied per patient per
proved for weight loss. Of these, sibutramine
year was 111 days for sympathomimetics. The
(Meridia) and orlistat (Xenical) are approved
average total supply of drugs per patient per
for up to two years of use.16 The other medica-
year was 118 days, which reflects the fact that
tions are sympathomimetic amphetamine–like
10 percent of patients in the data took multiple
benzphetamine, phendimetrazine, diethylpro-
Patients spent an average of $304 each for
pion, and mazindol.17 These amphetamine-like
weight-loss medications each year; patients
drugs are labeled for short-term use (up to
paid 26 percent of this amount, and health
twelve weeks).18 Orlistat is a lipase inhibitor,
plans, 74 percent. This annual total payment
which blocks fat absorption, while the other
per person increased with age, from $192 per
seven drugs are appetite suppressants.
person for ages 8–17 to $361 for ages 55–64. Al-
Exhibit 4 presents prescription weight-loss
though only 22 percent of users were men,
EXHIBIT 4Average Spending For Prescription Weight-Loss Medications In A Sample Of LargeEmployers, 2002
SOURCE: Medstat, MarketScan 2002 drug file (5.1 million nonelderly covered lives in employer-sponsored health plans with
NOTES: Number of patients and days supplied do not add up to the total since 10 percent of patients took more than one type
of drug. Sibutramine is a long-term appetite suppressant. Sympathomimetics are short-term appetite suppressants that
include phenylpropanolamine, phentermine, benzphetamine, diethylpropion, mazindol, and phendimetrazine.
H E A L T H A F F A I R S ~ Vo l u m e 2 4 , N u m b e r 4
men spent more on average on the drugs than
lost more than 10 percent of body weight at
women ($327 versus $297), because men used
one year compared with 10 percent of subjects
these drugs longer than women (122 days ver-
taking placebo.25 Other new drugs will block
sus 117 days per year) and because a greater
the hormone ghrelin, which is sent from the
proportion of men than women used the most
stomach to the brain to create an appetite.26
costly drug, orlistat (44 percent versus 36 per-
Some drugs will instead stimulate beta 3 recep-
tors to increase fat burning within the body.27
Finally, we estimated the prevalence of bar-
These new medications will likely increase the
iatric medicine use among obese adults with
demand for weight-loss drug therapy.
employer coverage for the drugs. From our
For the elderly, the Medicare program cov-
surgery in 2005.29 By 2010 this number could
As bariatric surgeons perform more surger-
grow to 475,000. Thus, if Medicare decides to
ies and outcomes continue to improve, it is
expand coverage for bariatric surgery in the
likely that more people will opt for the surgery.
near future, the potential demand by the el-
This potential demand may be quite large since
the number of bariatric surgeries has grown
Bariatric drugs are not included in the final
400 percent in just five years. This growth will
likely continue, given that only 0.6 percent of
the 11.5 million eligible people underwent the
Use of weight-loss medications declined in
act excludes agents used for weight loss. How-
1997 with the removal of fenfluramine and
ever, according to the final rules recently re-
dexfenfluramine from the market (because of
leased by the Centers for Medicare and Medic-
heart value abnormalities), but it picked up
aid Services (CMS), bariatric drugs can be
again in 1999, when orlistat entered the mar-
covered by Medicare Part D if they are pre-
ket.22 The industry reports that total U.S. sales
scribed for a “medically accepted indication”
for weight-loss medications in 2002 were $362
such as morbid obesity. Thus, it is not yet clear
million.23 In 2002 an estimated 63.3 million
to what extent the 500 potential drug plans in
U.S. adults were clinically eligible for weight-
Medicare Part D will choose to include bariat-
loss medications but these drugs were used by
ric medications on their formularies. We esti-
less than 2.4 percent of those eligible. Thus, us-
mate that about 3.3 million Medicare benefi-
age could greatly increase, given that many
ciaries ages 65–69 will be clinically eligible for
new, more effective prescription weight-loss
medications are being developed.24 Some of the
new drugs in the pipeline, such as rimonabant
tween the sexes in the use of bariatric treat-
(Acomplia), will block a pathway in the brain
ments. We estimated that 43 percent of the
that produces the craving for food. In recent
adults clinically eligible for drug therapy in
trials of rimonabant, 44 percent of subjects
2002 were men; however, only 22 percent of
adults taking bariatric prescription drugs
were men. In contrast, while 57 percent of
Santa Monica, Calif., under Contract no. 290-02-0003, Pub. no. 04-E028-2 (Rockville, Md.:
those clinically eligible were women, women
Agency for Healthcare Research and Quality, July
accounted for 78 percent of drug users. Also, 31
percent of adults eligible for bariatric surgery
7. Healthcare Cost and Utilization Project, “Data-
in 2002 were men, but only 16 percent of pro-
bases,” October 2003, www.hcup-us.ahrq.gov/
men.31 In contrast, while 69 percent of those el-
8. Cost-to-charge ratios are obtained from standard
accounting files at the Centers for Medicare and
counted for 84 percent of the surgeries. More-
Medicaid Services. For the estimation of costs inHCUP, see B. Friedman et al., “Practical Options
over, men had worse in-hospital mortality
for Estimating Cost of Hospital Inpatient Stays,”
rates than the women in their same age group.Journal of Health Care Finance 29, no. 1 (2002): 1–13.
The higher inpatient mortality for men is con-
9. We used the Consumer Price Index for all urban
sistent with higher coexisting illnesses or
10. In fact, patients age sixty-five and older ac-
counted for only 14 percent of Medicare bariatricsurgeries in 2002 presented in Exhibit 1 (com-
This research was funded by the Agency for Healthcare
pared with 7 percent in 1998). Thus, patients un-
Research and Quality (AHRQ). The views herein do
der age sixty-five accounted for 86 percent of the
not necessarily reflect the views or policies of AHRQ,
surgeries covered by Medicare in 2002 (through
or the U.S. Department of Health and Human Services.
the Medicare disability insurance program).The authors thank the thirty-five data organizations in
11. We did not include adolescents, since surgery is
states that contributed data to the Nationwide Inpa-
recommended for only a small subgroup: those at
tient Sample. They also thank the editors, two anony-
least age fifteen with a BMI of 50 or higher. SeeT.H. Inge et al., “Bariatric Surgery for Severely
mous reviewers, and Scott Smith for their insightful
Overweight Adolescents: Concerns and Recom-
mendations,” Pediatrics 114, no. 1 (2004): 217–223.
12. Of these adults, 10.6 million have a BMI of 40 or
more. About 868,000 have a BMI between 35 and40 with diabetes, the most common comorbidity
L. Bymark and R. Waite, Prescription Drug Use and
that makes this group eligible for surgery. This is
Expenditures in California: Key Trends and Drivers
based on 2002 obesity rates for adults reported in
(Oakland: California HealthCare Foundation,
A.A. Hedley et al., “Prevalence of Overweight and
Obesity among U.S. Children, Adolescents, and
2. Datamonitor, Commercial and Pipeline Perspectives:
Adults, 1999–2002,” Journal of the American MedicalObesity (London: Datamonitor, June 2004).Association 291, no. 23 (2004): 2847–2850. Diabe-
3. H. Buchwald et al., “Bariatric Surgery: A System-
tes rates among the obese can be found in A.H.
atic Review and Meta-Analysis,” Journal of the
Mokdad et al., “Prevalence of Obesity, Diabetes,
American Medical Association 292, no. 14 (2004):
and Obesity-related Health Risk Factors, 2001,”
Journal of the American Medical Association 289, no. 1
4. N.V. Christou et al., “Surgery Decreases Long-
Term Mortality, Morbidity, and Health Care Use
13. In the Medstat data presented in Exhibit 3, 2 per-
in Morbidly Obese Patients,” Annals of Surgery
cent of bariatric surgeries were follow-up surger-
ies. We applied this rate to bariatric surgeries for
5. Bariatric surgery is also recommended for a BMI
the national population presented in Exhibit 1.
of 35 or more with serious medical conditions
14. The hospital prices in Exhibit 3 are for large em-
(such as severe sleep apnea, Pickwickian syn-
ployers, which tend to have generous benefits,
drome, obesity-related cardiomyopathy, or dia-
while the cost estimates presented in Exhibit 1
betes mellitus). Bariatric drug therapy is also rec-
are representative of the U.S. privately insured
ommended for a BMI of 27 or more with two or
population as a whole. Therefore, we caution the
more comorbidities (such as hypertension, dia-
reader against making direct comparisons of
prices and costs across these exhibits.
6. P. Shekelle et al., Pharmacological and Surgical Treat-
15. R.E. Brolin, “Bariatric Surgery and Long-Term
ment of Obesity, Evidence Report/Technical Assess-
Control of Morbid Obesity,” Journal of the American
ment no. 103, Prepared by the Southern Califor-
Medical Association 288, no. 22 (2002): 2793–2796;
H E A L T H A F F A I R S ~ Vo l u m e 2 4 , N u m b e r 4
and R. Steinbrook, “Surgery for Severe Obesity,”
26. Bays and Dujovne, “Anti-Obesity Drug Develop-
New England Journal of Medicine 350, no. 11 (2004):
27. S. Vansal, “Beta-3 Receptor Agonists and Other
16. American Society of Health-System Pharmacists,
Potential Anti-Obesity Agents,” American JournalAHFS Drug Information (Bethesda, Md.: ASHSP,
of Pharmaceutical Education 68, no. 3 (2004): 1–10.
28. Centers for Medicare and Medicaid Services,
17. In November 2000, the FDA requested that
“National Coverage Decision 40.5: Treatment of
phenylpropanolamine be removed voluntarily
Obesity,” 1 October 2004, www.cms.hhs.gov/
from the market. In our 2002 data, only 2 percent
mcd/m_ncd.asp?id=40.5&ver=2 (11 April 2005).
of bariatric drug claims were for this drug.
For tracking CMS updates to its bariatric sur-
18. Mosby, Mosby’s Drug Consult, 14th ed. (St. Louis,
viewncd.asp?ncd_id=100.1&ncd_version=1&
19. Orlistat is recommended for one year, with treat-
ment continued after one year if the patient toler-
Surgery+for+Obesity (11 May 2005). In 2004 the
ates the drug well and sustained weight loss is
CMS removed the language “obesity itself cannot
documented. D.C. Dale and D.D. Federman, eds.,
be considered an illness” from its manual. In late2004 the CMS gathered the scientific evidence
ACP Medicine (Danbury, Conn.: American Collegeof Physicians, 2005). In a 104-week clinical trial,
on bariatric surgery. Its next step is to decide
12.9 percent of patients on orlistat dropped out
whether to expand coverage for bariatric surgery
of the study because of adverse effects and treat-
to all morbidly obese elderly people, not just
ment failure. See J. Hauptman et al., “Orlistat in
the Long-Term Treatment of Obesity in Primary
29. This is based on a 3.9 percent morbid obesity rate
Care Settings,” Archives of Family Medicine 9, no. 2
for adults age sixty or older, reported in Hedley et
al., “Prevalence of Overweight and Obesity.”
20. This is based on a 30.6 percent obesity rate
30. This is based on a 32.9 percent obesity rate
among adults in 2002, reported in Hedley et al.,
among adults age sixty or older, reported in ibid.
“Prevalence of Overweight and Obesity.”
31. This is based on obesity rate estimates by sex in
21. This growth trend may be dampened by recent
K.M. Flegal et al., “Prevalence and Trends in Obe-
health plan decisions to drop coverage for bar-
sity among U.S. Adults, 1999–2000,” Journal of the
iatric surgery. Blue Cross and Blue Shield of
American Medical Association 288, no. 14 (2002):
Florida and Nebraska have recently dropped
coverage. See R. Stein, “As Obesity Surgeries
32. E.E. Mason, K.E. Renquist, and D. Jiang, “Peri-
Soar, So Do Safety, Cost Concerns,” Washington
operative Risks and Safety of Surgery for Severe
Post, 11 April 2004. Some health plans are instead
Obesity,” American Journal of Clinical Nutrition 55,
carving out bariatric coverage as an optional
benefit. Blue Cross and Blue Shield of NorthCarolina introduced a new benefit, Healthy Life-style Choices, designed specifically to deal withbariatric treatments. See B. McKay, “Blue Crossof North Carolina to Cover Cost of Treating Obe-sity,” Wall Street Journal, 13 October 2004.
22. R.S. Stafford and D.C. Radley, “National Trends
in Antiobesity Medication Use,” Archives of Inter-nal Medicine 163, no. 9 (2003): 1046–1050.
23. Datamonitor, Commercial and Pipeline Perspectives:
24. See J. Korner and L.J. Aronne, “Pharmacological
Approaches to Weight Reduction: TherapeuticTargets,” Journal of Clinical Endocrinology and Metabo-lism 89, no. 6 (2004): 2616–2621; J. Proietto et al.,“Novel Anti-Obesity Drugs,” Expert Opinion on In-vestigational Drugs 9, no. 6 (2000): 1317–1326; andH. Bays and C. Dujovne, “Anti-Obesity Drug De-velopment,” Expert Opinion on Investigational Drugs11, no. 9 (2002): 1189–1204.
25. Korner and Aronne, “Pharmacological Ap-